Fix the VA's claims process

Veterans injured while on active duty receive disability benefits from the Department of Veterans Affairs. Unfortunately, significant deficiencies have hampered the VA’s system for processing disability benefits claims, as evidenced by the nearly 1 million claims pending before the VA, an average processing time of 162 days, a 60 percent overturn rate when claims decisions are appealed and a $4,000 range in states’ average disability pay awarded to similarly injured veterans. The claims processing system must be fixed before more disabled soldiers, sailors, Marines and airmen return home from Afghanistan and Iraq.

The system has failed in large part because of inadequate training and a perverse performance appraisal model. VA claims processors, who use complex legal and medical criteria to determine whether a veteran is eligible for disability benefits, are not held accountable for meeting their training requirements. Some VA instructors have not even completed training in the subjects they teach. This may explain why claims processors perform what should be standardized tasks differently, leading to similarly injured veterans receiving vastly discrepant disability payments.

Equally problematic, the VA’s performance appraisal system values above all else the quantity of claims processed. Claims processors must resolve an average of at least 3.5 claims per day. (This is a floor that VA regional offices can – and do – raise.) The time needed to process each claim varies with the number of injuries alleged therein. Even so, claims processors receive only one credit for deciding a claim whether it contains a single easy injury or seven complex injuries. This drives claims processors to ignore difficult, multi-injury claims. Additionally, claims processors lose no credit when their decisions are overturned on appeal, guaranteeing that quality is insufficiently emphasized in their work.

The following five steps are necessary to fix the claims processing system.

First, the VA must lower its production quota. A recent study found that fully-trained claims processors cannot properly rate 3.5 claims each day. Yet, if the standard goes unmet, claims processors and their managers may be fired. This unattainable quota has thus infected the VA with a culture that views anything that even temporarily slows claims processors’ output – including training and accuracy of claims decisions – as impediments to production. Indeed, some claims processors decide claims without necessary medical information because they receive no production credit for gathering missing evidence. And some VA managers limit claims processors’ ability to order medical exams required to evaluate veterans’ injuries.

Second, to make up for the resulting loss of production from a lower quota, the VA should use its budget increase to hire more claims processors. To efficiently allocate the new hires among VA regional offices, the VA can use battlefield injury data to anticipate where newly disabled veterans will file claims.

Third, the VA must ensure that all claims processors are adequately trained. A properly trained claims processor works faster while committing fewer errors. Moreover, correcting training deficiencies will likely save the VA money – a welcome benefit given that it is expected to spend $46.9 billion this year in disability payments. After studying 100 claims in 2007 (more than 800,000 claims were filed that year), the VA reported that errors committed in those claims cost taxpayers tens of thousands of dollars in incorrect overpayments.

Fourth, the VA should measure claims processors’ performance by the number of injuries they rate. The current system does not accurately assess productivity and results in claims processors fighting over simple claims. This modification will make it easier for the VA to award partial payments to veterans, such as when only some of the injuries within a claim can be processed.

Finally, claims processors and the VA regional offices they work at should lose production credit when claims decisions are overturned on appeal. Penalizing poor work will force the VA to create effective training and drive claims processors to take training more seriously, resulting in a balanced mix of quantity and quality in claims processors’ work.

Now that President Obama has ordered 30,000 additional troops to Afghanistan, the VA must immediately undergo bold, comprehensive reform. Implementing the five steps outlined here is a good start.

Leaf, an attorney at Kirkland & Ellis LLP in Los Angeles, does pro bono work in the area of veterans’ disability benefits claims.